good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe and andrew. in our headlines this morning, documents settling the insider trading case against sac capital are expected to be signed by the hedge fund and prosecutors today. the deal includes a guilty plea to one count of securities fraud. kate kelly will join us with the late nest a minute. in the meantime, bids for blackberry are due today. there there's a tentative bid. other parties said to be vying for blackberry include serberus, qualcomm and the co founders. tri-point homes is trying to buy the company for $2.7

billion. tripoint is backed for gary sternlicht. andrew, good morning. >> there's some synergy there, as they say in the merger business. also, we have some corporate buzz. "the new york times" reporting that u.s. authorities have expanded the probe into jpmorgan's hiring practices outside of china across the asian pacific. they're focusing on south korea, singapore and india. the d.o.j. was exploring other areas. we talked a little bit about this. jpmorgan is the one that actually went to the d.o.j. and started talking about these other hiring practices and now they've expanded their probe. there they are. good news, in the i.p.o. space, october was the busiest month for u.s. offerings since 2007. 33 companies raised more than 12 billion companies. finally, a new cnbc associated press poll is finding that the social network faces skepticism from potential

investors and broader publica head of its initial public offering. kayla is going to join us with more of those details in a minute. joe, over to you, sir. >> thank you. dallas fed president richard fisher has a harsh message for washington. he says an ineffective frac shus and physically irresponsible government has slowed the u.s. recovery and counter acted the stimulative effects of the fed's super accommodative monetary policy. double super accommodative i dare say. in prepared remarks to australian business economists in sydney fisher says in part, in his words, while the fed has been moving at the speed of a boomer in full run, is that a -- >> what is that? >> is that a kangaroo. >> a boomer center? >> a boomer what? >> boomer --

>> boomer esiason. he wasn't that fast, i don't think. they say it best exhibited the adaptive alacrity of a koala. >> must be an australian thing. >> without being anywhere near as cute as the koala. that's interesting. >> boomer may refer to animals, fictional characters, comics, video games. >> doesn't explain it. >> that's a large male kangaroo. >> that's what we were just told. large male kangaroo. so it doesn't have a pouch then? not all kangaroos have pouches? >> i guess you wouldn't need one if you were male, right? >> unless it was like vestigal. >> if you're male, i don't think you have one? >> i don't think so. unfortunately some of us humans -- you know. we're not carrying babies in our pouch. fisher -- mine's less than it was. you have nothing. fisher will vote next year on the fomz. he wasn't a voting member this year.

meantime, one of this year's voting members, yes, jim bullard will join us on set at 7:00 for two hours and we may -- he may be a little different in tone and substance than plausser we talked to on friday. >> they're both hawkish. they have different reasons for why they get there. >> yeah. exactly. >> but they get to the same place? >> i think plausser is even more -- bullard has recently been more dovish than he had been. >> what i don't get is once you get him going and you get fisher going voting, does that actually change the dynamics? >> no. >> they all fall in line. >> it's interesting. >> collegial voting. >> plausser wouldn't have done qe 2 he said last week. >> but he voted for it. >> i don't know. let's check on markets this morning. markets continue to do well based on whatever you think it is. people have two different ways of looking at it.

either it's the fed or it's what the economy is going to finally do because of the fed up another 12 points. a decent session on friday. oil has been a pleasant surprise for commuters from $195. the ten year, interesting on friday got down, now it's back up -- it's been anywhere between the 2.4 and 2.6 handle recently. the dollar has been moving in the right direction for travelers. just recent, 1.35. we could go on to 1.35 which would help a little bit. then gold made its move to the mid 1300s and immediately turned back down. it's been in the trading range for i would say about six months. >> so plausser becomes a voting member next year and bullard is a voting member now. >> fisher -- >> he won't be. >> fisher will be next year. >> okay. >> you have new york, dallas, minneapolis, cleveland, philadelphia. >> i guess what i'm wondering, does the voting actually change the outcome? it sounds like the answer is no. if yellen says this is what

we're doing, this is what we're doing. >> may get more contemptuous and more arguing. >> the minutes are more interesting. >> there's joeys and there's boomers. >> those are babies. >> babies. >> boomers are adult males. >> there's a song, a fame yoousg so he was clued in. >> smarter than we are. finally figured it out. >> knew more about australia. let's get back to the top stories. kate kelly joins us with the details of the sac settlement. good morning. >> reporter: good morning, becky. it looks like today is the day after weeks of negotiating the embattled sac capital will finalize an agreement with u.s. prosecutors to resolve charges of securities fraud regarding to insider trading. they're expected to pay a fine that amounts to $1.8 billion. that's $1.2 billion in new

charges related to the criminal settlement but at the same time they paid $600 million earlier this year in a similar but separate charge that they'll get credit for. this is probably the largest fine on record in terms of insider trading cases. probably the largest as well for the u.s. attorney for the southern district in manhattan and certainly high ranking for the justice department as well. instead of just pleading guilty to everything in the original indictment from july of this past summer, sac i'm told will have modified charges that they plead guilty to in a sort of separate court filing. we can look for that as early as today. that may go public today. the papers are likely to show up in court and then we'll hear, i think, from both the u.s. attorney and sac and this is going to essentially end life as sac knows it, at least for a time. what's going to happen is they'll lose their registration as an investment advisor with the securities and exchange commission and because of that they won't be able to manage public money. they'll have a brief grace

period, i'm told, in order to redeem the remaining outside money that they still have, but then they'll essentially convert to a family office early next year, becky. so that means they'll only be able to manage money belonging to steve cohn, the founder, certain employees and his family members. >> hey, kate, couple questions this morning. one is this doesn't resolve any potential criminal liability for steve cohn, the man himself, is that true? >> well, let me give you a dual answer to that. i mean, i guess it doesn't, although i think if they had the material for a criminal individual case against cohen, they probably would have brought it at this point. now they continue to try current and former traders. in two weeks from now we'll see the trial of michael steinberg and i assume the fbi continues to try to turn witnesses against him. so i think you can't rule that out in the future, but i would probably not expect it at this point. >> the only reason i ask is because if you remember and you

remember so well given -- now we're talking about a $1.8 billion settlement, 600 was already from a prior settlement, some people meant the whole thing was over. here we are they would argue we're sort of double dipping. it seems to me they're taking a second bite at the apple, why not take a third? >> right. i think that's certainly possible. the 600 from earlier this year is an interesting discussion. i think in the hedge 23u7bd cumulatikmu cumulative -- fund community, i think you would have expected this to be tied up. instead you have steve cohen fighting personal charges that he failed to supervise errant employees, which is the nature of a pending civil case against them. and i'm glad you brought it up, actually, because that won't go away with today's settlement. they'll still have to fight that next year and i'm sure that will have an impact on whether or not they can reopen as an investment advisor. >> one other question which is this, wall street has been a huge beneficiary of sac.

they've been the largest fee payer to wall street in terms of fees off of just straight trades. what happens to what you think looks like the firm in the future and therefore their relationships with the rest of wall street? >> i actually would not expect substantial changes for now, and here is why. after sac was indicted on july 25th and between that and a protective order that the southern district of new york and prosecutors there signed with sac, basically the street was given a certain guarantee. sac's not going out of business. the government is not going to try to hasten that. they want to avoid hurting third parties, investors, you know, brokerage firms, prime brokers, what have you. now they're still operating out of that. if they become a family office they'll manage $9 billion. i know the plan is to keep things largely intact. they may have some additional layoffs. i don't think any of that has been determined.

basically they'll still be a high fee payer. when you talk to people on wall street, you probably have as well, andrew, they'll say this is an odd situation. this isn't sort of your everyday thing. we've received assurances from the government that we're okay in continuing these trading relationships. otherwise, we'll move forward. >> do you think -- once there's a guilty plea is there a firm that says, you know what, guys, you've been a great client, we can't do business with you? >> reporter: i've asked that question leading into today and i certainly think, you know, as we have some of these wall street executives on air we need to ask them that, but to my knowledge, nobody is planning that. the most dramatic thing i've heard is that they're going to sort of reassess when this happens. but it's the government that they're looking to for guidance on whether they bear any liability for continuing to do any business. so far they've been told they do not. >> kate kelly, fascinating story. the biggest -- this has been going on. it's a soap opera that seems like it's coming to an end.

i don't know if it is. it's now time for the golden markets and we'll go across the world to lon ton to karen chow tso. >> you can see we are ahead by a third of 1%. some of the individual indices to show you. you can see the core is still performing. the ftse is a backer. hsbc, for instance, one of the banks reporting here today, .4% is what you see across the ftse. ryanair holdings, 11% of the down side its shares have slumped. they cut the profit target for the second time in two months. the ceo michael elyria claims the demise of the demise of alatalia will help them. >> one of the opportunities with the new 175 aircraft order is

the fact that alatalia will get smaller. i think no matter what the rules are, the italians will continue to bail it out again and again and again. it will continue to create huge opportunities for us. >> alatalia having impact across the board. air france klm which is being forced to deny reports that it's asked alatalia to cut 5,000 jobs. and alcatel-lucent shares are down 6%. along with a $750 million high yield bond and elsewhere hsbc shares, i mentioned one of the better performers, 2.4% higher. analysts are saying the numbers came in line with forecasts. hong kong, one of the outperforming regions. heavy volume of stock and about 20% higher in the first 30 minutes of trading. you can see a very strong ticker in the stock price. let me move to the other markets

to share with you. bonds up. we had numbers out too, heavy impact. construction numbers impacting the markets. the highest level since 2007. across on the eurozone as well, manufacturing numbers coming in line with the flash numbers showing an expansion. 1.68% is what we're seeing. u.s. treasuries, 2.61%. we are around the 4% mark as well, too, for italy and spain as you can see. now crossed below the 4th% handle. not much pressure there on markets. a lot of liquidity in the markets. let me toss it back over to you. >> thanks for that report. we are also just days away from twitter's first trade on the new york stock exchange. how does the public view it as an invest. kayla has the results of a new pole. >> twitter is set to price on wednesday and trade on thursday. cnbc teemed up with the public to see how the public thinks

about it. half of all active investors don't think it's a good investment. a number of those who don't think it's not a good investment are high income respondents. many people think it will be profitable in the next five years. one might think the most optimistic group would be the most frequent users, millen yals. when surveyed, 50% of the group said they wouldn't put their money in t. they have been weary about the stock market overall. there are broader questions about the business model. the majority of those with twitter accounts in the survey says they lurk or read news. more than half said they've never even noticed promoted content. twitter's ad writers say 2015 earnings will be a turning point. twitter in terms of overall favorability ranks low compared to its peers. only 19% had a favorable view of the company. that's pretty low compared to

47% for pb but, of course, potential facebook and google and linked-in had their dots, too. it's up because of their ipos. because of the volatility and sentiment, it's very likely that twitter underwriters will keep these shares to wall street as well. >> i wondered about that. did we do a poll like that before facebook or is this a new poll? >> we did a similar poll almost exactly the same before the facebook ipo. 54% of people thought it was a good investment. >> that's interesting. >> it is interesting. >> this guy, kayla, andy kesler -- >> i know andy. we've had him on the show. >> why twitter's ipo is a bigger deal. he's talking about ways that it will allow you to use the second screen. that's why they hired the nbc person, because people watch tv and young people are tweeting while they watch tv. >> some of these live shows,

some of the shows that get the highest rating. >> it will be better than facebook for advertising. facebook is up to 122 billion market cap. this is 13 billion. why are our viewers not that bright for something? i don't -- this guy's making the ka thas twitter's a much bigger deal than facebook. >> the problem is it's not as far along in its development. facebook by the time it went public is making a profit, twitter is not there. it's harder to be able to point to that. >> more potential. >> underwriters on the road are saying look at 2015. 2015 is the year they've circled on the calendar. we are hoping by that time we will be profitsable. that's saying twitter is more important than the other social networks because it inspires a conversation. the others get you to go on there. twitter has the power to get you to engage. >> twitter is suffering from the facebook ipo. >> twitter i use for work. facebook i would never -- if i had to choose one or the other -- >> you sometimes tweet pictures from vacation. >> i would take twitter if i had to take one or the other.

if i could only have one. facebook, i don't use very often. >> twitter is not suffering from facebook's ipo, it's suffering because people have been leaving facebook because it's been littered with ads. >> i think it's almost a good thing that people haven't noticed the twitter ads. i didn't see one until you pointed it out. i didn't realize it was an ad. >> i'm not following them. >> it was an nfl thing that i almost wanted to link on. >> it's like who are you? it's not retweeted. how did you get on here? >> you don't realize it. >> i do. >> most people don't realize it. >> when they ask do people realize there are promotion there is, you're saying they don't. >> the negative of that -- >> many people don't know. >> 54% of people just lurk on twitter. they use it either as a news feed, they just read. they don't retweet. they don't engage. the problem is if you're an

advertiser. if you're comcast and you want to buy an adebayor on twitter, only pay how many times it's engaged. >> if you link on it. i almost linked on the nfl. i didn't realize it was an ad and then i almost clicked on it and then i got busy. >> that's the same with facebook. paper click. it will show you the ad 10,000 time but comcast only pays if you click on it. >> right. more people, more impressions. certain banners you play a flat fee for. video ad. you play a flat fee for the home page. >> little things do bother me. >> you have strong powers of observation. >> my clock in my car. >> drives me crazy. i haven't changed mine yet. >> that's my problem. my car is different than my last one. i used to have just -- it was easy. a manual thing. it can't be like that. i had every manual out. i couldn't -- i said, you know what, i know it's an hour fast. it doesn't matter to me.

>> drives me crazy. >> and i'm driving and so yesterday i said, you know what, i'll be back in a while and i left the family and i went out there and i -- until i figured out how to do it, i wasn't going -- you know what i had to do? i had to get in and i had to set it to where i live in the world because it's based on gmt. so it's minus five -- and something is different. now they think i live in newfoundland because i had to change it where -- now i think -- because remember -- >> i had to go through my gps. >> gps. >> i don't know how to change mine. i was driving to my cousin to the new york marathon. i saw the clock was 6:30 and not 5:30. you're going to miss the marathon. >> did you notice if you went to a bed, it was an hour extra this morning? i feel good today because i had an hour extra. it's going to take me a while. >> even an hour later is still dark. >> it is. but i got to sleep until 5:00 today not 4:00 even though it

said 4:00. in my car, i finally did do it. it was bad. it took me probably two hours. >> can you change mine? >> i could have dropped the transmission by the time it took. this is the way -- >> another reason not to have a vehicle. >> another reason not to have -- >> i enjoy my vehicle. i'm not in this argument. >> no. you have to have a car. he had to rent a car to buy a pumpkin. >> that's true. >> anyway, coming up, google's executive chairman -- there's two kinds of people in the world, those that think the nsa -- that think snowden is a hero or who think he's a scoundrel. >> there are two people in the world. the nsa blasting the nsa over spying reports. google likes to keep all their spying to themselves. they couldn't want other people having their spying information. what the d.o.j. wants u.s. airways and amr to do. as we head to break, the weather channel's alex wallace joins us. 32 degrees this morning, alex. >> cold. yeah.

there's no way around it. cold. not just for new york city but the rest of the northeast. very chilly start to things. a lot of 20s in the interior. syracuse to buffalo, 20s. therefore, no doubt about it we have chilled down those numbers. good news is we'll get a chance to warm up as we head through the week. high pressure drifts east and on the west side the winds will turn more out of the south and the south winds are a warming wind. we'll get a chance to see the 60s by mid week. hang in there. we have some showers moving now from parts of mexico into texas. this is thanks to some moisture coming in from a tropical cyclone which has made its way through mexico. moisture from the golf of mexico. a cold front from the north. that's going to keep things on the wet side for today including dallas. we have some wintery weather. parts of the rockies could see significant snow. the first significant snow for spots like the twin cities heading through our tuesday into wednesday. that's your national forecast. more "squawk box" coming up in

just a bit. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh

oo. welcome back, everybody. right now it's time for the executive edge. this is a daily segment focused on giving business leaders a leg up. eric schmidt is blasting the nsa on spying. in an interview with the wall street journal he describes an act like this as outrageous and potentially illegal if proven.

>> it's really outrageous that the national security agency was looking between the google data centers if that's true. the steps that the organization was willing to do without good judgment to pursue its mission and potentially violate people's privacy is not okay. it's just not okay. so in that sense the snowden revelations have assisted us in understanding that. it's perfectly possible that there are more revelations to come. >> schmidt says that google has registered complaints with the nsa, president obama and members of congress. gentlemen, joe you were saying before there are two camps of people. >> here's what the nsa said. the nsa referred to some of the press articles treatmently that they had misstated facts and mischaraterized the nsa. this is definitive. unless they're lying, the nsa follows all of the laws, regulations and policies and assertions do a grave disservice

to the nation, its allies and partners and the money who make up the nsa. >> i was in the antisnowden camp but something i read yesterday in "the new york times" gives me a little bit of pause. they pointed out that the nsa has 35,000 people working for it. it has a budget of $10.8 billion. at this point they are collecting so much information. >> no morsel is too small? >> yeah. it's a little staggering when it used to be you would do whatever you can when the agency first started. you would do whatever you can. technologically they can do anything and there aren't questions. >> i remember why you take it at face value what the nsa is saying. the fact that they're collecting 320 million or 320,000 -- >> i take it at face value because i don't care what they're finding out. right, if i do something wrong, then i'll worry about it. but i'm not smuggling meth, i'm not walter white. >> the bigger issue is if you have somebody who's getting ahold of that. >> the irs.

>> when they give it to the irs and lois lerner -- i still haven't seen my refund. they may already know about me. no, look, whatever it takes to -- you know, to make sure that we're safe in the homeland. >> you're okay with it. >> what i was unhappy with in the article -- >> i'm fine with it. >> -- there was the front page and two full pages inside of that. there was a lot of information in it. what i thought was not fair about the article, it buried some of the terrorist plots that they were unable to recover. >> i saw a picture of some guy in germany. it looked like he was getting an award. >> couldn't have been in germany. he was in gefrm ma any? >> yeah. >> they're considering giving him, you know -- >> you didn't see the picture of him holding -- >> was he actually in germany? >> yeah. he's looking at finding some sort of a deal so that he can -- >> he wants clemency in germany. >> hard to tell you something you don't know. >> you don't know all the details. there are so many secrets surrounding it.

we don't know so many of the things that you would need to make an educated decision on whether it's right or not. but the idea lone that they have 35,000 employees. >> and google -- you know, schmidt has to succk up to the left because it's google that i think of. the great thing about this is you don't have to be mad at the president for this because it's bush anyway. he started it. the president was unable to stop it. >> this has nothing to do -- this is -- >> i would be somewhat -- if i wanted to slam the current administration, i could, but i don't want to. i don't have a problem with this. and the people that do have a problem with it, they don't really like president obama because they're basically an extension of bush's -- >> at this point you have some on the intelligence committee saying look, some of the stuff they told us they were doing, it's not true. some of the things they were not doing, they didn't tell us about. there's a select group of people who need to know. >> there's no business implication. i'm curious what you think of this. google is a u.hs.-based company.

at&t may struggle to be able to acquire companies in europe because the company -- >> you talked about it. i don't know whether that's -- you were worried about blackberry. >> i think you're in the same place. >> we'll see. >> what happens if that's the case? >>. >> i don't think it is. >> what if it is. >> it's like kaasa blank at tca. we are way better at it. >> we're better at everything. >> we are better at it. my concern, again, is there's an oversight committee there for a reason. >> sharing stuff. >> half the stuff we found out that they were mad about they had supplied to us. >> when there's no deal -- when some company needs to do a deal out there are you going to scream protectionism? >> i'm he not going to worry. if you like mna, i'm all right. >> you're fine? >> i don't think that's going to happen. you're worried about it beforehand. been worried about a lot of things. >> growing the pie. >> no one over there -- >> that's a huge leap to say because of the nsa someone over

there is not going to allow at&t to make an acquisition over there. they're not. >> let's see. >> all is fair in love and war. business goes on. it's not personal, sonny. >> i'm taking this tape in case this goes south. >> it's not personal. when we come back we'll talk about whether fracking is the future. we have the pros, the cons, etc. behind the energy revolution. stick around. i have low testosterone. there, i said it.

see, i knew testosterone could affect sex drive, but not energy or even my mood. that's when i talked with my doctor. he gave me some blood tests... showed it was low t. that's it. it was a number. [ male announcer ] today, men with low t have androgel 1.62% testosterone gel. the #1 prescribed topical testosterone replacement therapy increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breast-feeding, should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer,

lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. welcome back to "squawk box" this morning. making headlines. "the wall street journal" reporting that they want to see a broad package of divestitures from amr and u.s. airways as part of any deal to settle the

merger plan. the d.o.j.'s antitrust suit says the deal would harm consumers by reducing air service and increasing fares. that case could go to trial in a few weeks. this is a little dance going on. fracking has made the united states the world's fastest growing energy power. on track to pass saudi arabia by the year 2020. that's according to a new book out tomorrow "the fraccers." joining us is the author, award winning journalist, greg zuckerberg. what i love about what you've done with this book is taking what happened with the energy revolution and tying it to the financial crisis where it was people who were on the outside who really saw what was happening first. >> yeah, that's the shocking thing. so who should have been the one to see this energy revolution? should have been chevron, should have been exxon, should have been the industry experts and they didn't. they were caught blindsided by this whole thing. exxon literally, their

headquarters is on the barnett shale which ended up being one of the biggest in our country. it was sort of these interesting entrepreneurs, outsiders in some ways who got it and believed in this country. it's a very american story for good and for bad i would argue. >> what these guys saw that nobody else realized, i guess it was a crazy way of getting the oil out of the shale that others thought couldn't be done. >> they figure out how to get the shale. everyone knew there was a lot of oil in shale and gas in shale but everyone figured there's no way we can get it out. let's go off shore, africa and asia. there are a few americans who said, no, we have to figure out how to do it in this country. they were small guys and didn't have options to go off shore. they had to figure it out. >> who are some of these wildcats. >> george mitchell, son of a goat herder in greece. he was an immigrant. he was running out of gas. his company was called mitchell energy. nick steinberger, i wrote about him. he had a break through and

changed the country and the world. there are guys like harold ham. he grew up dirt poor. couldn't even start school until christmas time each year because he had to help his parents in the fields picking cotton and watermelon. now he's worth about $14 billion. his wife is going to walk away with more money than oprah. that's a lot of money. >> who is the publisher of this book? >> penguin. >> did you talk to them about the title? no one thought of meet the fraccers? >> why would you call it meet the -- you are introducing the frackers to us. you didn't want it to be funny? >> we thought about it. >> you thought about meet the frackers. >> look in the back of the book. it says meet the frackers. >> i thought it was only me. >> you know what, then it's fine you didn't use it. we ran it past them. they were like, ah, no. i gave it a shot. >> sticks in a mud. >> for business, right.

for the paper back, we can switch it out. >> meet the frackers. >> i show the characters. >> each of the characters. very clever. >> most frackers. the word is begging for double entend entendre. were you able to mention mother combined with frackers. >> the mother of all frackers. >> greg, at this point people have totally bought into this, the idea of an energy revolution. we're looking at the numbers where we're taking over russia, the amount of oil and gas that we produce in this country. what are the big guys doing at this point? >> it's a remarkable phenomenon. if you're over 30 years old you remember how just a few years ago we as a nation were running out. we were nervous we were running out of oil and gas. now we have so much we're going to export gas which is a crazy thing. the oil guys, big guys are catching up big time. exxon bought a company called xto for about $40 billion a few

years ago. the smaller guys, mitchells, harold hamm is doing well and continental made about $2 billion since my book went into print in july. the small guys are holding on. at some point you would think the big guys open up and buy them. >> greg, we want to thank you for coming in today and wish you the best of look on the book is meet the frackers. or "the frackers." >> he said no to meet the frackers? >> he liked the idea, joe. we discussed it. in the end we liked this one as well. >> i think you need to go for it. i do. i do. in the reprint we'll do it. >> got to make a phone call over there. we have a big week ahead for the global markets. ecb decision thursday. u.s. job reports friday. we have a preview of what to watch. that's coming up on "squawk box" right after this. farmers presents: fifteen seconds of smart.

so you want to drive more safely? stop eating. take deep breaths. avoid bad weather. [ whispers ] get eight hours. ♪ [ shouts over music ] turn it down! and, of course, talk to farmers. hi. hi. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ the ocean gets warmer.

the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon.

the main focus for the markets this week is the october jobs report due out friday. joining us on the set, chief investment officer at corner stone wealth management. alan, just in a nutshell, has the market been doing well just from the liquidity from the fed or because the liquidity is going to have a positive effect eventually on the underlying economy, therefore the market does well? >> i think both, joe. i think the fed has supported the equity market, but the equity market has been going up because of quarter 1 profits which have been strong. >> and that being helped by the qe 3? >> i think so. i think it's held interest rates

down. that's helped corporate profit margins which are an all-time high. i think the market is telling us the economy will get better in 2014. >> do you think the wealth effect, animal spirits become kicked into motion and the consumer feels better and it counter acts some of the drags that we've had? >> i think it does. we can measure this. we have consumer confidence. the index is at 71 today. it's well up from the lows but it's still far from the highs that we've seen at previous peaks in the market. >> did you talk to bullard in the greenroom? >> i did. i did. >> he's great, isn't he? he's giving you -- jim bullard is over here going, yeah, yeah. >> we're both in st. louis. >> he just said great mind. >> st. louis. nice heading, jim. nice hitting. ten runs every time they play the reds, they get ten runs. >> still a great year. still a great year. >> what happened? >> they're not going to beat boston. i don't think anybody was going to beat boston. >> good pitching beats good hitting, doesn't it? where are you on s&p earnings next year? >> you know, we think earnings

this year will be a 107.50. next year could be as high as 120. >> not going down? >> not going down. >> i thought corporations had already extracted things that they could from the cost side? >> the gdp is going to grow probably closer to 3% in 2014 and consumers are start to go gain some of that confidence now that washington is behind us. >> i guess we'll see. so as far as long-term, you know, nightmarish scenarios, do you ascribe to any in terms of a five or $10 trillion ball sheet if we get there? >> we have to get our fiscal house in order. >> i'm talking about just the fed. can they suck that back out? can they bring the balance sheet back in to equal? >> eventually they need to. i think you'll hear that here in a few minutes. i think the fed has done the right thing by having the foot all the way down on the gas to

get this economy back going again and when that growth is sustainable, the fed will pull back. >> so, okay. then none of these things that we worry about, i'm talking about a participation rate of 62, food stamps doubling in the last -- disability, people -- more people on government assistance than with full-time jobs at this point, on some type of government assistance. does that ever start to reverse and head back the other way? >> it does when the economy starts to improve. >> this is all a reflection of what we went through? nothing that we're self-inflicting now? >> i do think an activist government needs to pull back to a better balance, but i think investors needs to take the focus a little bit off of washington and recognize that the real economy is slowly starting. >> i was just saying that to someone, that it's a credit to the u.s. the resiliency of the greatest economy in the world that we're doing this well with everything that's going on. >> absolutely. we've made it through. we're going to see more improvement next year. if investors are focused so much

on washington, they're missing the opportunity to being invested. peace of mind is important when you're running a successful business.

so we provide it services youc with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next.

afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.

. . . . welcome back to "squawk box" this morning. our next guest argues the majority of investors don't have the edge. once you accept this as a fate or fact, you're more likely to be better off in the long run. lars explains it all in his second book, how to invest without speculation and sleepless nights. lars is also former hedge fund

manager, founder and chief of holt capital. and good morning to you. >> thanks for having me. >> you are a professional money manager, or were, actively managing stocks. >> mm-hmm. >> and you think the whole thing is a crock? >> no, that's not exactly what i say. what i argue is just because some people have edge in the market doesn't mean that everyone has an edge. >> this is the warren buffett market. most people can't do it themselves. and there's only a handful of warrens out there. >> correct. >> and if you're going to do that, which index funds do you buy? >> buy the broadest and cheapest index you can get your hands on. in the sense if you consider only equities for a minute, although it extends to other asset classes, you should buy the broadest index of equities anywhere in the world you can get your hands on, do it as cheaply as you can. in a sense, that would be the world equity index, as an example. >> why did you get out of the

business? >> as a long story short, i ran a hedge fund for five years in london. in the end of it, had a rough year, it wasn't rough, we were down 10%, 20%, return capital, and continued. >> what was the maximum amount of money you had? >> about $300 million. so, yeah, we did okay. >> lars, let me ask you, do you think -- i heard the argument before about average investors not being able to do it. do you think it's a good deal? or do you think people are better off? >> well, what i want to do in this book is turn the argument on its head. it's not so much whether i come to you and claim, what is the ability to distinguish between me and 10 other lars that come and ask for your money? to say to you, i can pick the one out of maybe 1 to 1 1/2 out of 10 that perform in a ten-year

period. that's a tall order. if you can't do that, you probably don't have edge and you'd be better off in an index fund. >> where do you stand on etfs? >> i think they're a great vehicle. when i studied this from a theoretical perspective in school, etfs were not a great alternative. now there are quite a bit and much cheaper than they were. >> would you ever invest in a hedge fund? >> yeah. i sit on boards with several hedge funds. >> okay. >> keep in mind, i'm not -- >> you have edge? >> i think i have an edge -- >> in picking -- >> in picking those hedge fund managers. but also, keep in mind, again, if i didn't have it, you know, i've been in the industry for a long time since university and i know these people, known them for many years, i know a lot about finance. some people might disagree. if i don't have it, what chance does my mom have? what chance do regular investors have? >> if that's the case, if you -- and i understand warren buffett's argument for this too, what is the analyzed return that

you should expect as an investor? you're probably not looking at 20%, 30%. is 8% even fair? some pension funds were expecting that and they're not going to get it. >> no, and i think that's going to be a massive problem for the next generation. not just because we're expecting, if we assume equity markets, historically if you go back several hundred years all over the world, the risk premium has been 4%, 5% above inflation. you can see that's the return we have gotten for the kind of risk equity markets have been. >> and that's what an individual investor? >> and that's roughly, i think, if the risk is similar going forward, that's probably the kind of return we should expect going forward. in any one year, they could be massively, massively different. this is why an investor, it's incredibly important to think long and hard about your risk levels. and how you're going to implement your portfolio. so, you know, risk is -- risk is a funny one. you talk a lot about. we appreciate the standard deviation. but i -- one of the other things i argue in my book is a lot of

investors today are really amazingly concentrated in their portfolios. so your portfolio consists not just of your investment portfolio, but your house, your job, your education, your future inheritance. >> right. >> and look at yourself like -- chances are, you know, you have a house close to here, your education is related to this industry. you have a job in this industry, alternatives in this industry also. you're already pretty concentrated. >> right. >> and if you add to that concentration in your investment portfolio, i think you'd be doing yourself a disservice. >> lars, thank you for joining us this morning. the book "investing demystified" appreciate having you here. >> thanks for having me in. coming up, jim bullard. talk about tapering, jobs and more when we return. customer erin swenson ordered shoes from us online

but they didn't fit. customer's not happy, i'm not happy. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer. then, repeat customer. easy returns, i'm happy. repeat customers, i'm happy. sales go up, i'm happy. i ordered another pair. i'm happy. (both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics.

the squawk the squawk reserve, today's special guest host, st. louis fed president james bullard. a voting member of this year's fomc and never one to mince words. the taper, the economy, janet yellen and the future of the fed. no topic is off the table as the second hour of "squawk box" begins right now. >> good morning, everybody, welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin and steve liesman. we're watching the futures this morning. right now, dow futures up by about 26 points above fair value, s&p futures up by 2 1/2. and in our headlines this morning, we are expecting a settlement to be announced today between the government and s.a.c. capital.

the settlement would be worth $1.8 billion when you include that $616 million fine that the firm has already paid. s.a.c. would also plead guilty to one count of securities fraud. and twitter is facing a dose of skepticism ahead of the ipo later this week. that's according to the cnbc associated press poll. 47% say buying twitter stock would not be a good investment. 36% take a positive view. and california home builder tripoint homes is merging with warehousers home building position. the deal is worth $2.7 billion. and tripoint would become one of the top 20 u.s. home builders as a result of that deal. barry sternlicht will be here tomorrow starting at 7:00 a.m. on "squawk." and a number of events of note this week. tomorrow, we're getting the release of this year's most anticipated video game, activision's "call of duty

ghost." >> we'll get them all. >> the latest installment of the call of duty series which sold over 100 million copies. i can't believe it's 100 million. >> was that -- video games and c.o.d. was one of them. and there was another one my son got. >> check this out on wednesday, twitter expected to price 70 million shares for $20 a share. we'll have that ipo on thursday morning. but then on thursday, there's the ecb rate decision and third quarter gdp released. and on friday, the delayed government jobs report is finally out for october. so we've got a lot to look forward to. or not. >> we've got that going for us, which is nice as they say. >> we do. dallas fed president richard fisher with a harsh message for washington. he says an ineffective fractious government has slowed the u.s. recovery. and that's not that profound. but also counteracted some of the effects of the fed's super accommodator monetary policy. i don't know if he said that or we said that.

in prepared remarks to economists in sidney. fisher says in part while the fed's been moving at the speed of a boomer, a big male kangaroo which is not held back by air going into the pouch, a boomer in full run, the federal government of the united states has at best exhibited the ada adaptiadap adaptive alacrity of a koala. and with a lot of pressure on him to come up with analogies as good as that, you've got to include some koalas, boomers -- >> i appreciate your translating the australian for me. boomer esiason or chris what's his face from espn. president and ceo of the federal reserve bank. and good to have you in. >> good to be here again.

>> we just got done playing baseball. >> get done is the operative word, too. you were finished. >> did win a pennant. >> if that's what you're hanging your hat on. both you -- you know. you and the reds in the same place. >> i thought we were in good shape up 2-1 and had two games in st. louis. >> pitching is -- that's what i finally came to the conclusion of. the pitching really matters in the end. >> oh, yeah. >> and i love -- and then you've got ortiz who -- >> ortiz was fantastic. fantastic. unstoppable. >> almost like he was a superhero almost. like he had some kind of super power. anyway, what month will the taper begin? >> this is that -- >> how's that, steve? >> let me do it the way steve would do it. he'll ask you this later. what month will the taper begin? >> no, joe, you do this, i don't. >> i do that?

>> this is a data-dependent program. and we're going to look at the data and make a decision at each meeting. and so i do think we've made substantial progress in labor markets, unemployment is down almost a full point from when we started this program in september 2012. we've got faster job growth to the tune of 40,000, 50,000 per month since we started the program as compared to the six months before the program started. >> but the last couple haven't been -- >> they haven't been -- they've been a little mixed recently. but i think this motion of cumulative progress is the one you want to think about. and we have had a lot of cumulative progress in labor markets. and every jobs report that continues to show more jobs being created and a tick down in the unemployment rate, is going to mean the probability of a taper goes up. >> plus, you've got skewed data. >> yeah. this report here coming up on

thursday will be hard to interpret. but aren't they all hard to interpret? >> does the fed have anies a risk on that number? >> i would use the second "s," but -- >> brinksmanship. >> do you put anything there when you talk about low sevens? do you say it's low eights? >> the participation rate, i've come around, seen research recently that's consequenvinced more this is demographic. >> doesn't change the issue it's there, does it? it does? >> the participation rate has been coming down since 2000. and if you fit a pretty good demographic model to that, you'll basically predict it'll be right where it is. so unemployment really is a pretty good measure of how we're doing. >> doesn't feel great. >> welm, it's seven -- you know, over 7%. that's not what we're used to in the u.s. but, still, it's better measure of labor market performance than

people have been giving credit for. >> isn't there an argument, though, even though it's demographics and people are retiring, we're living longer and people are going to have to start working longer too? there's the argument that some people retire because they can't find -- >> yeah. so the demographic model i have in mind is just, you know, you look at different age groups, men and women and maybe some other groups and you look at their propensity to participate in labor market. then you look at how the whole population's changing and fit those propensities in and that's what you get. but this issue about living longer and maybe working more, that probably is not in the model. >> eventually i would guess you would need to see the demographic model switching to suggest people don't retire until '68, '69, '70. >> if you're going to live a lot longer and start working a lot longer, that would be a new

phenomenon. >> i want to follow up. using the term substantial progress, i think, advised quite intently, right? so you're -- >> cumulative -- >> you said substantial. >> cumulative is the most powerful argument for tapering. >> okay. >> we started off saying we're looking for, you know, substantial -- substantially better labor markets. >> okay. so when you say that, you're saying the preconditions for tapering have been met? >> yeah. >> which means you're signaling by using those terms, it could happen at any meeting because the preconditions are met? >> we could cite substantial progress at any meeting. however, we've got other things going on. we've got low inflation. that's why i've been willing to be patient about this. what's your hurry? you don't have to be in a big hurry. i also think we have room on the balance sheet whereas maybe some others don't think we have room on the balance sheet. >> what does room on the balance sheet mean? >> if you look at the size of

the balance sheet relative to gdp, who's got the biggest one? japan? europe? uk, u.s.? we're fourth out of those guys. we're actually low on that kind of a dimension. we're in the low 20s. the other guys are 25%, 30%. so if you think something bad is going to happen, you're going to pass some threshold and something bad is going to happen with the balance sheet, these other central banks should've already passed that and had that experience and they haven't. so i think we've got, you know, i don't want to take too much risk -- >> right. >> but i think we've got some room to go on that. >> so sounds like you're putting another test on, which i guess has always been not as explicitly stated. which is substantial progress on labor, but also, you need to see some measurable improvement in the inflation rate toward the 2% goal. >> i'd like to see it heading back to 2%, i'd like to see some tangible evidence that we're going back to 2%.

right now, we're quite low or near 1%. we haven't seen too much evidence. >> what's the cutoff for when you stop calling rising inflation and improvement? what would you get to? eight? it's improved to nine. >> no, no no -- >> and it's really kicking at 14. >> when you set an inflation target. you should hit the inflation target. you should not -- >> it's a weird word for rising inflation. >> you should defend the inflation target. >> what will our growth rate be including the shutdown in this quarter? >> the growth rate in this quarter? >> fourth quarter. yeah. >> i don't know. i've been encouraged that the third quarter numbers are looking better. tracking estimates about 2.5%. >> 2.7. >> 2.7. >> by the way, the street consensus is below that. >> been wrong on every quarter.

well, it's around 2.7, and the dow jones reporting on friday was 1.9. >> so what you really have is second quarter actually came in stronger than expected. a good holiday season, put together a good string of quarters, we'll see what happens. >> it's a clean number. that's before the government shutdown. the fourth quarter's not going to be clean. >> you know, the government shutdown, i don't think at least mechanically, i don't think it's going to have that big of an impact on growth. those furloughed people are getting back pay and the contractors are just going to have to work somewhat longer in the next quarter. there's some substitution going on there. it's probably not that big of a deal. it was a hit to confidence and that is a concern for the holiday season and for retailing. we're going to have a retailer on. i think a little bit later in the show. we'll get some idea about that.

did you book that first guest? >> i had nothing to do with that. >> you talked to him in the green room, right? >> i did. >> yes, the fed has been very effective. what did he say? >> substitution. you lost in this quarter you'll get in the next quarter. >> all of a sudden his -- just his smile. >> it's like job security for me. when they say stuff like that, someone needs to explain it. >> wow. >> no, they don't. >> please don't. please don't. please don't. >> right afterwards. i didn't follow that point. >> why, jim, would you -- >> and how many -- how many viewers at home have a little smile on their face, steve? >> this smile -- zero! >> i hear from them, they send me e-mails. >> we're going to come back. a boomer can be a navy ballistic missile, or david wells, the

former -- >> boomer? >> yeah, we don't know what fisher meant. he said koala -- he probably meant -- >> speak like the local people. >> if you've got comments, questions about anything you see here, shoot us an e-mail. you can also follow us, of course, on twitter @squawkcnbc is the handle. the predecessors have smashed records bringing in millions for activision. we'll preview "call of duty: ghost," and the upcoming holiday season. that and more coming up when "squawk" returns.

back toome welcome back to "squawk box" on this monday morning, checking the futures right now. the dow looks like it would open up about 30 points higher. the s&p 500 up over three points and the nasdaq would open up close to ten points higher. bids for blackberry, they are due today. if you're playing at home, you can -- well, not going to be that much. get some credit cards together and buy the thing. a tentative bid from fairfax financial to take the device maker private, it would be for $4.7 billion. also scheduled to be firmed up. other parties said to be vying for blackberry, lenovo is

involved. and blackberry's co-founders also potentially putting in a bid. we are back with our guest host this morning, st. louis fed president jim bullard. and, jim, both joe and steve already asked you, what's the month you start tapering. let me ask it differently. because after september, we all figured if you didn't do it then you're going to have a hard time starting before at least march or april. that's where the fed futures are now, april, as a starting date. and the reasons behind that, you've still got washington is a mess. they're going back to the same negotiations that began in january and february and if that was a big reason for not going it last time around, would you want to start tapering before you you have any solution in washington? >> yeah, that's a good question. i think we can't really wait for the political situation in washington to be just right because, you know, evidently, they're going to be bickering forever here. so i think you don't want to put

too much -- too much in that particular pot, i think. >> all right. let me ask you this. and i know you're not speaking on behalf of the fomc. but in your opinion, would it be strange for bernanke to have his last official act to be something where he actually cut rates? would he have to do that by january? >> cut rates? >> i mean to begin the tapering. yeah, to begin the taper if it were his last act, would that be strange if it were yellen's first act, would that be strange either? >> i don't think the committee put much weight on anything like that. it's a continuous process. and, you know, and it's a committee that's making the policy. and they want to adjust at the right time. and i don't think it would be any problem. >> you don't feel any pressure? has that issue ever come up either directly meaning people are like -- physically talk about it in the room? or is it sort of -- is there a little bit of a cloud? or people in back channel where they say, well, ben's going to

be leaving soon. he wants to get this show on the road. you know, what's the -- >> no, i don't really -- it's not really like that. i think the committee's trying to get to the right policy. there's always issues around monetary policy. we only have certain meetings every -- twice a quarter that we can make decisions. so we use our meetings as well as we can. i think if you start bringing in stuff like this, then, you know, you take all your meetings off the table, you can't make any decisions. >> there's no reason to think there's going to be the same issue in three months. i think everybody's calmed down a little bit. but let's say the worst-case scenario happened, what are the chances the fed could go up? zero? >> well, if you've got a very bad situation and the committee would have to think hard about what we want to do next. >> but -- >> i do think qe has been effective and we could do more. i don't think that's likely but

i certainly would not take it off the table. less than 20%. >> nobody knows with these guys. >> right. we could. >> i thought you were going to say no way. what happened? >> on the taper? >> yes. what happened back then? >> it was a close call. i think it was a close call. the data came in more mixed than we anticipated. we told the story in june that the economy would be stronger in the second half of the year. and as of the time of the september meeting, we didn't really have very much evidence that the economy was stronger. and so -- and i think for me, especially, inflation's been low. we don't have to be in any hurry. >> you said cumulative -- >> why don't we get more data and go on from there?

>> you just -- were selling us on the substantial cumulative, positive effects and it's only gotten worse since the shutdown. >> but for me, you don't have to be in a hurry because of low inflation. >> i feel like i'm more confused than i was before you started talking. before you started talking, i was convinced -- >> succeeding. >> and you're -- yeah, it's probably successful from what the fomc would like the market to not really know what's coming next, right? >> no, i don't think that's true. when you can show how things -- how we react to variables in the economy. the truth is, we've never been able to get to that. it's too experimental of a policy. we don't have enough experience to get to that point. and we have not been able to get to it. and there's a lot of controversy, a lot of intellectual cross currents about the program.

that's where we are. and we do the best from there. >> what happened in september was the market thought it was starting to understand the fed more. the fomc more. that it would understand about when things would be more li likely. the market was surprised. do you worry that the fomc has lost some market street cred? >> i think we enhance the credibility because we show we're reacting to data. we said it was a data-dependent policy and turned out to be a data dependent policy. i think we've got that part right. the other thing going on in september is the ten-year had gone up to close to 300 basis points. i think that was a surprise to many on the committee. it's since pulled back some from there. that was a big issue. >> do you guys -- >> we've got to take a quick break. when we come back -- the street cred issue -- and i wonder if you sit around talking about

this issue. if we kind of give our finger to the market, then we get a little bit of extra points ultimately. and how much of that conversation takes place of what the market's going to think versus what the public thinks, versus how it's going to move things. we can talk more about that later. >> fortunately, jim is with us for the rest of the program. we're also going to talk about the soldier in all of us, at least that's what activision is hoping when it releases the new "call of duty: ghost" tomorrow. we'll find out if they should be in your portfolio. right now, taking a look at the futures, green arrows this morning, dow futures up by about 30 points, s&p up about three points. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.

cme group: how the world advances. ♪ ♪ so you can get out of your element. so you can explore a new frontier and a different discipline. get two times the points on travel and dining at restaurants from chase sapphire preferred. so you can be inspired by great food once again. chase sapphire preferred. so you can. help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, where experts

watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer.

you just need the right professional to help you take charge. ♪ welcome welcome back to "squawk box" this morning. the u.s. wants a major set of divestitures at large u.s. airports if it's to approve the proposed merger between american airlines and u.s. airways. that's according to reuters which says the discussions are centering in key airports like washington's ronald reagan airport. that trial set for a couple of weeks from now. delta and jetblue, the first

two to apply new rules about the use of electronic devices. so excited about this. you can now use those devices from gate to gate without turning them off. it's a grin. the exception, mobile phones and devices that connect to mobile networks, those must be put in airplane mode. i'm still trying to understand how they're going to enforce that policy. and sci-fi movie, "ender's game" topped the weekend box office taking in $20 million in north american ticket sales. they pushed last week's winner, "bad grandpa" into second place. becky? still to come this morning, will "call of duty: ghost" have what it takes to bring down "battlefield 4." we're going to talk about gaming wars. ke rowe here at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from?

your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. bny mellon combines investment management & investment giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon. because what you don't know, can hurt you.urance. what if you didn't know that posting your travel plans online may attract burglars?

[woman] off to hawaii! what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪

brian, you're a failure. brian, you're a failure. i beat you. and i will --

>> i'm told there's some -- something you do in "call of duty," different than the tea bagging that -- there's something you do -- what, you kill someone and show them. >> i can't believe you just went there. >> okay. there is something in "call of duty" that you do that has nothing to do with -- highly anticipated "call of duty," a new version of battlefield on store shelves already. talk games stocks with the senior analyst. on jeopardy the other night, my son got the most -- the hardest one, a.c. is coming out too, "assassins creed," do you know that one? >> of course. it's number four and it's actually more like number six. >> is that this week? >> it's same day -- well, actually came out last week, it's probably about a 10 million unit seller, about half as big

as "call of duty" and 2/3 as big as battlefield. >> it's a stupid question i asked you if you knew about it. but yeah, it was the hardest on jeopardy. you're not that excited about atvi, ea, i understand, it's up so much. it's up 100%. but activision with "call of duty," why would this not be a time to buy that given that "call of duty" in the past has had such huge numbers. >> we haven't had a transition like this in the past. we've got two big consoles launching at high prices, the play station 4, and i think the wallet drain is going to be huge, because neither microsoft nor sony want to give an inch to the other. they battled it out in north america the last cycle. i think they're both going after the early adopters. the same guys who buy "call of duty," and they're about to be $500 poorer after they buy their

console. i think it's got to hit activision at the margin, ea at the margin. i think it's a good time to wait. >> you'd buy ae, though, before atvi? >> i think ea has a much clearer path to revenue growth. activision has three giant franchises that drive huge margins but each vulnerable to competition. and i think we're going to she that this christmas. whether battlefield cuts into the lead, disney infinity cuts into sky landers lead. there's room there for activision to fall off the perch. i don't think it'll happen, but i think investors will be skeptical until they see it proven, activision is healthy in the screen. >> i've been hearing about the new boxes too. so you've got to buy all new video games for play station 4? >> yeah. they aren't back ward compatible. so yeah, yo uv got to buy the new version. >> wow. and same with the other. and you would buy game stop now,

as well? >> yeah, game stop's tripled. i think people are still underestimating how much earnings power. the stock trades at about seven or eight multiple, i think another $7 or $8 to go on the stock. >> and you're not the most modest guy, but you know abo about -- more about twitter than anyone else on the entire sell side industry. >> i certainly have more followers. >> excellent. so we did a poll and our viewers are not that excited about the ipo, i guess. and that -- you think that twitter is probably a pretty good story versus facebook, right? >> i do. twitter's kind of the opposite of facebook, dominates among younger people and hardly used at all among older people. i think it just takes time and takes savvy media outlets like

cnbc to start promoting their talent. i mean, you guys, most of you guys don't have followers as me, that's crazy. i've got 36,000 followers, and i don't think anybody knows who i am. why don't you guys all have 1 million followers? you will. give it time. once your outlet -- >> how did you get 36,000? >> i think it's my good looks. >> no, really, what did you do, michael? >> i get on tv a lot and i actually use the social media site to promote me as a brand. it works. >> wow. >> what about facebook at this point? there are concerns about -- i mean, it's $113 billion market cap, i think. $122 billion right now and it's losing cache, you would say? >> i don't think so. the people who aren't using facebook as much are young teens. they see everybody they know every day.

they go to school with all of them, their entire universe lives within five miles of them. they don't have any real reason to be on facebook and don't appreciate the utility of facebook. we older people, i mean 18 and up, start to move away from home, our friends aren't right at our fingertips, don't see them every day, we don't have their phone numbers, can't text them. facebook's a great way to reconnect. you gain an appreciation for facebook when you're older, i think the same thing will happen with twitter. we'll start using it. >> who was the winner of that competition, michael? >> it's like saying who wins between ebay and google. twitter is essentially a news site. and you track realtime news. you also can have a relationship with a celebrity who you don't know because many celebrities actually respond to twitter followers. facebook is a place where you find your friends. there are completely different purposes so both of them are going to win. >> what about the effectiveness of the advertising on the platforms? >> facebook far more effective

right now, twitter only has three ways to advertise. it'll take a while before twitter actually figures out how to mine all the data that they have. i think they're in the first inning. they haven't begun to try. >> okay. >> zynga you'd buy? >> he's a little more shy than i expected him to be and he's not making bold pronouncements. >> thank you. >> thank you, appreciate it. see you later. still to come this morning, we have much more from jim bullard. in the next hour, we'll be joined by haley barbour. he'll help us rise above the politics in d.c. can a budget deal be reached? we'll ask him that question and what washington needs to do to win us back.

i don't always watch cnbc, but when i do, i prefer stocks to watch in the animal orchestra. keep watching, my friends. so i c an reach ally bank 24/7, but there are no branches? 24/7. i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank.

a better way to save. ally bank. your money needs an ally. customer erin swenson ordebut they didn't fit.line customer's not happy, i'm not happy. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer. then, repeat customer. easy returns, i'm happy. repeat customers, i'm happy. sales go up, i'm happy. i ordered another pair. i'm happy. (both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics.

cani i can never get her to -- now she's going to perform this. yeah. i told you about that two months ago. and you wouldn't listen to -- i get them -- i get the early call. i get the early call from sirius xm, i forget the name. time warner cable upgraded. the firm believes fundamentals are bottoming, and now sees a

tie-up between charter and twc as more likely than not. is that going to happen? >> i don't know. time warner cable gets taken out. they do, but you saw last week they lost 300,000 subscribers. it's going to get worse. that's another problem. but i think what happened with the cbs thing is a real thing. especially, in new york city specifically. they're not losing another market. it's another market. >> the wall street had -- little column about -- and the big story was despicable me, $900 million -- i said there's the difference. this is comcast. >> you need a lot of hits to make that work. >> 900 million? from 78 million? >> right. but you have to have that repeatedly. can't be a one-time event. >> gap downgraded to neutral from buy at goldman sachs,

target cut to 40 from 42. kohl's upgraded to buy from neutral. what do you think? ubs? >> sure. >> the firm notes confidence in the turn around strategy. target goes to 69 from 54. then a.k. and stld, steel dynamics upgraded. the goldman sachs is moving its steel sector coverage view to neutral from cautious. it sees the sector heading to a sustainable recovery over the coming years and argues its risks associated with oversupply appear to be largely priced in. although the company did downgrade reliance to neutral from buy. but went up on the other ones. >> okay. >> welcome you for a monday. when we return, we're going to wrap things up with st. louis fed president james bullard. mr. kernan will keep singing during the break, as well. "squawk box" returning right off this.

coming up at the top of the hour, former mississippi governor haley barbour will join us to talk health care. the debt battle in congress and a lot more. plus, plenty more to come from our guest host st. louis fed president jim bullard. keep watching "squawk box" on cnbc. first in business worldwide. does it end after you've expanded your business? after your company's gone public? and the capital's been invested? or when your company's bought another? is it over after you've given back? you never stop achieving. that's why, at barclays, our ambition is to always realize yours. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better

and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. they're the days to take care of business.. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next.

welcome back to welcome back to "squawk box," we are back with jim bullard. we haven't really talked to you

about janet yellen too much yet. >> not mentioned. >> we haven't mentioned her name. i want to understand the dynamic of how you think a meeting is going to change under her leadership. >> i have a good answer to this. >> yep. >> very little. >> very little? >> she's been an insider. that's the biggest thing about janet. she's been at the table the whole time. she was my counterpart at the san francisco fed for quite a while. she's been vice chair of the board. she was on the board. she has a lot of fed experience. she's been in the middle of designing policy. i would not expect a lot to change. there's a lot of continuity. >> i guess from that perspective, having someone inside the fomc, whether you agree with them or not is preferable to having someone from the outside. >> yeah, i think for an outsider right now, it'd be a hard time to come into monetary policy. instead of just having the policy rate, it's become, you know, all these different things, all these different

considerations. i think it would be very hard for someone from the outside. >> and you have no problem voting against her? >> well, i havecember dissentede past and reserve the right to do so in the future. >> she's been one of the most outspoken advocates for transparency at the fed, i think. >> yes, she has. she designed the current communications strategy. she was head of the communications committee. and so she's done a lot of work on that. >> and do you think that has -- >> do you think that's been a positive? a negative? do you think it's brought more volatility to the markets and to your own decisions? do you think it has helped, hurt? >> well, first of all, it was a necessity. this policy is so complicated than what we did in the past that you could not go on being opaque, i think. that was one part of it. and i think we have made a lot of improvements, one of chairman

bernanke's goals was to find ways to be more transparent and get better communication with -- i think we have done that. >> let me ask you a different question. we talked about this during the break. i said when you come on the show, you seem open but at some level, a little bit guarded, as do most fed governors that come on this program. now that your meetings are recorded, inside the room there's actually both the minutes and then transcripts of what goes out. >> yep. >> how open is the actual dialogue recognizing that effectively at some level you're also on tv? >> well, there's a great story behind that because at one time in the early '90s, the committee did not know that meetings were being recorded. and greenspan, former chairman alan greenspan took a lot of heat from the committee when they found out -- >> how did they find out? >> i forgot exactly how this came up but there was an inquiry from congress and they had to admit that things were being

recorded. >> that sounds -- >> that's when they came up with the policy about five years -- five-year transcripts. but it did change the character of the meeting. i was staff at the time and our president, i know was concerned about this. >> does that mean -- >> actually reading a statement. >> and do you do that now? >> i jot down what i'm going to say but i adjust what i'm going to say compared to -- >> does that mean that the real action is going on behind the scenes? meaning you're back channeling, on the phone with each other because you know these meetings are televised events? >> you know, we do see each other on many different occasions and -- but it's too large of committee to do everything through phone calls. you've got 19 people, and actually, i've tried to do it a few times, call around to everybody. it takes a long time. it's not that easy, actually, to have a lot of coordination. so the meetings really are meetings and they're important and that's when you really get to hear what everybody thinks.

>> one other quick one on yellen. people have said over and over again that ben bernanke was the perfect person to have in the midst of a financial crisis given his history, given what he'd studied, the whole package. and that was an argument at some level for larry summers. do you think if we hit another iceberg she will be as competent if not more so than either of those gentlemen? >> i think she's very competent. plenty of background in the fed and her experience has been tempered, both on the monetary policy side, on the bubbles issue. she's been through two of those. on regulatory issues, she's been in the middle of that. so she's very well prepared for this. good resume for this. >> there's things like this happening, right? >> i think this is the number one piece of macro economic news we've received in the last few weeks here. very low inflation. in europe, you guys might know,

i was in europe in the spring, and i gave some speeches over there. i was trying to get them to pay more attention to the low inflation rate and think about extraordinary policy actions they might take. the ecb has not been one to do qe or to do forward guidance. and it's only recently that they've come around. so this will be an important juncture for them. >> i was just seeing, you've got that -- and let's say china -- i don't know, things, maybe they're not growing as fast as we think they are. let's say the deflationary forces start to increase again so that -- you like being able to continue qe without worrying about inflation. but if we never get -- if we go years where if you wanted to, you have cover to stick with qe. because inflation stays low. would you stick with it? sounds like you're saying, you know, as long as we don't have to worry, why not do it? why not get some of the benefits, even if it's questionable as long as

inflation is low. what if it stays low for another two or three years? >> well, a couple of years would be a long time. and i think we're in an experimental policy and we're -- >> still experimental. >> you'd have to make a judgment at that point about what you want to do. i think we're okay for right now. i don't want to go too far into the woods here. >> okay. if you wouldn't just continue qe to try -- if inflation didn't respond by moving higher. that wouldn't be a reason to continue qe. if things get better in the jobs market and the economy, then you'll end it because of that? >> well, if you're going to end it with inflation low, you have to ask yourself how are you going to hit the inflation target? >> well, you might not end it if inflation stayed low? >> well, how are you going to hit the inflation target? do you want zero inflation? do you want minus one? >> you could see a position where the jobs numbers start to respond?

>> japan kept interest rates low for 15 years. >> keeping interest rates low and doing $85 billion a month, you could keep talking about how long you keep -- >> i think you should think about qe more as a normal policy when the policy rate is at zero. it's a very reasonable thing to do to substitute for the fact that you can't lower interest rates any further. it's reasonable to do bond purchases. this makes a lot of sense. very conventional monetary policy. >> if you're at zero. >> 85 is a torrid pace. i will give you that. and $1 trillion a year is a torrid pace. and i'd rather get out of it if we can. but i'd like to meet our goals. >> wow. >> would you -- if the housing market started to turn around, would you shift away from mortgage back securities and focus it somewhere else? >> yeah, i think there's been a lot of talk in financial markets about whether -- if we tapered whether it would be on the mortgage backs or on the

treasuries. for myself, i think just keep it simple and do both at the same time and not try to be tricky about that. >> do you think -- >> the guys that really hyperbolic guys -- when you put in a government program crisis, you never get out of it and it'll be forever. and i made it the metaphor that instead of priming the pump now it's just gasoline for our economy. >> what are you worried about? >> keep filling the tank. >> what are you worried about qe? >> is there a limit to -- >> it's inflation. you're worried about we're going to set off a '70s type inflation. but it's not coming. >> but if you wait -- >> the camp, including my own staff, has to think about, you know, has to re-examine some theorys here. i mean, are you just going to keep saying this big inflation is out there in the future? five years in the future?

or are you going to adjust a little bit compared to the evidence? i would have thought by the time we got to this point with this big of a qe program, i would have thought that we're running pretty high inflation and i'd be coming on here, you know, trying to be -- trying to -- but that isn't what has happened. everybody's got to re-examine their theorys a little bit about what's going on here. >> the question is whether you see it in time. that's going to be the trick. >> yes. >> and the issue for the fomc has often been behind the curve, not soon enough. >> right. >> very cognizant of that. >> we're going to have a lot more still ahead this morning. when we come back, former mississippi governor haley barbour, we'll talk to him about what's happening in washington. by the way, check out the futures right now, dow futures indicated up by 45. they have picked up a little bit of steam this morning. "squawk" will be right back. my mantra? family first.

but with less energy, moodiness, and a low sex drive, i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron. the only underarm low t treatment that can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions

and medications. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting and increase in psa. ask your doctor about axiron. help the gulf when we made recover and learn the gulf, bp from what happened

so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, where experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger. when you when you set an inflation target, you should hit the inflation target. >> one hour with jim bullard. your money, your vote, tomorrow is election day, but today marks one year until the

midterm elections. we're going to tell you what to expect from tomorrow's races and who's on the hot seat in 2013. haley barbour will join us to talk politics, health care and a lot more. it is monday, november 4th, 2013, and the third hour of "squawk box" begins right now. welcome back to "squawk box." here on cnbc, first in business worldwide, i'm joe kernan. our guest host this morning jim bullard, many from president bullard -- sounds pretty good. doesn't it? >> thank you, man. >> yeah, you're welcome. first, though, becky has your morning headlines. >> s.a.c. capital is expected to complete its deal with government prosecutors today. the firm will settle charges with the guilty plea to

securities fraud and a $1.8 billion fee if you include the $616 million they've already paid to the sec. as part of the plea, s.a.c. will lose the investment adviser administration with the sec. kate kelly has been following the story and will join us later in the hour. >> unbelievable story. it's the end of a soap opera and maybe a continuing soap opera. also, a number of events of note, tomorrow, we get the release of this year's most anticipated video game. that's going to be hitting the stores. it's the latest installment of the call of duty series which has sold over 100 million copies. twitter expected to price 70 million shares for as much as $20 each. they'll probably go on sale the next morning. on thursday, though, there's also an ecb rate decision and third quarter gdp. we're going to be getting that. and on friday, the delayed government jobs report for october and we will see what the government shutdown has meant to the employment or unemployment picture.

also, election day coming up tomorrow and with no federal races for the house or senate on the ballot, the virginia and new jersey gubernatorial races have stolen the spotlight as well as the contest for mayor of new york city. continues to lead, rather, cuccinelli in the polls and chris christie expected to win reelection over democratic challenger barbara buono. and today, also marks one year -- is that true? one year until the 2014 midterm elections. some key state races to watch. here we go, we've got senate majority leader mitch mcconnell. he's going to be facing a tough challenge in kentucky from tea party challenger matt bevan. and lindsey graham also expected to be challenged by one or more tea party candidates in the primary.

alaska democrat may have to defend his seat against joe miller as the tea party candidate who won the republican primary in the last election but lost to a write-in campaign for lisa murkowski. also north carolina democrat kay hagan. won her first term in 2011 but likely to face a tougher challenger. we're going to get a quick check on the markets, take a look at what's going on. dow would open up about 44 points higher, s&p up four points and nasdaq up over 12 points. obama care to the ongoing budget battle, the chaos on capitol hill continues. joining us to talk about these stories and more is haley barbour. he's also founding partner of bgr group. and governor, it's great to have you here today. >> thank you, becky, glad to be back. >> what do you think, you shake your head, scratch your head? >> well, for governors who get

paid to do things, you know, it really is concerning that washington's just constipated. there's nothing else you can say about it. the president doesn't lead, the republicans, i thought, really did themselves a lot of damage. the democrats are not interested in working together. i mean, there's nothing to recommend it right now, except for republicans, the real shame

of it was for three weeks, we kept obama -- care off the headlines. >> that's what baffles me. >> you have leaders of the tea party movement that don't see eye to eye with the traditional establishment of the republican party. how does that get resolved? >> well, i'll tell you a little bit of a tweak on that. they don't disagree on policy. if you take the average regular republican take 20 issues, they'll be the same on 18, 19 issues, on taxes, spending, deficit, debt, health care, energy. it's been over tactics. these fights have been over tactics and strategy and what irks me is to see groups like the senate conservative fund attack conservative republican senators, not over their policy votes but because they disagreed with them on political tactics. now, there's no place for this, you know, purity in politics is the enemy of victory. and what we want is what you said a while ago. republicans want to take over the senate so we'd have the house and after next year the senate, we have to win six seats. we've got at least seven good

shots. and for our guys and people like cruz to want to start big fights over tactics is a setback. let's focus on policy where people see the difference between us and obama. >> who leads the party to that conclusion, though? there hasn't been someone who has been able to. >> i think governors do. if you look at governor and is their records of success, whether it's scott walker, john kasich, rick perry from texas had a fantastic run. and that's where we are actually in control. when you've got one house of congress and the other party's got the other house and the president and you've got a president who doesn't want to work with you then you look to those governor. huge victory in new jersey, democratic state, why? because he's done a good job. that's what people want. >> how do you get governors from both sides of the aisle working with people in washington. i mean, the question we've been asking at cnbc is how do you win us back? because right now, the average american voter doesn't have a

whole lot of confidence in washington. how do you actually up into that? >> well, first of all, get the governor -- i was a governor for eight years and we had a good relationship with our congressional delegation and with the whole congress, particularly after katrina, when there was something going on and we needed help and it had to be -- it was a unique disaster unprecedented disaster and we needed unprecedented support. we've got a lot of democrats who helped us. barney frank, a little bit more liberal than i am. barney frank wrote a letter to every democrat in the house and said, please support governor barbour's plan. now, that's the way it ought to be in times that are serious. and the fiscal crisis in our country is serious. and we ought to be trying to work together. but governors can help that because they're used to leading. and you're right. there are a lot of democrat governors who are -- who want to do the same thing. they balance the budget every year. they don't go four years without a budget. that's just unheard of in state

governments. so we want to push more of what we're doing in the states up to washington as an example. >> barney frank is no longer in congress. who do you look at from the other side of the aisle. of the governor who will work to get things done from the other side of the aisle? >> it's very hard. and one of the reasons is the difference in attitude of the obama administration. i mean, we have a president -- the president has to lead. congress can't lead. you can get help from congressmen like congressman frank who helped us in our time of crisis. but the president has to lead. and on the democratic side, he's not showing any leadership that gives any democrat member the idea that what they ought to be doing is trying to work with the republicans. >> then do you write off the next three years as it can't happen in washington? >> i don't think you can write it off. i think it's good they've got this conference committee that's

going to try to work out a budget deal. i'm not overly optimistic because the president says means $1 trillion in new taxes. the republicans say a budget deal should mean more economic growth. >> they also say no new taxes. >> well, they say we'll produce much more revenue but not by raising rates. and history bears that out. but they're so far apart, the only way they can get there is if the president does like reagan does or did or did like clinton did. and both of them were ready to lead and to try to work out compromises that were good for the country rather than worrying about politics. >> they were both governors. former governors. this guy is not a governor. >> well, community organizer is not a good training ground to be president. >> no private sector, not a governor. good luck. you said it, we can't write off the next three years but you're writing off the next three years. >> i'm not. >> might as well. >> i think republicans are going to do very well in '14 election

despite the government shutdown. >> well, president's at 40% this morning. 40%, down from 42, down from 51. that didn't help anyone in this latest shutdown. >> that's right. and look, i remember '95, '96 when we were blamed more for the government shutdown. we came back, we went 99% as many seats in '96 as we did in the greatest republican victory of three generations. in 1994, we won 227 versus 230. i think we'll do very well in '14. and that's the real important election right now. '16 will take care of itself, right now we need to focus on '14. >> who is the person who is the leader of the republican party? is it john boehner right now? mccain, romney? who do you look to as the voice? >> you know, when i was chairman of the party, newt gingrich and bob dole. two very different people with very different ideas. i was the chairman, i certainly wasn't the leader of the republican party.

but when you're out of power, there isn't one leader. we're going to have a very large field for president in '16. going to be a lot of capable people. but not one of them today you would say that's the leader of the republican party. tomorrow, i think what you're going to see, christie wins, i think in virginia mccollough in the polls. great lesson for conservatives, here's a libertarian going to take enough -- >> but it's kind of a flawed candidate that should have been much easier for the republican candidate. and if the last guy hadn't gone out with such a, you know, with all the scandal and everything else, it would have been a lot easier for cuccinelli. >> all true, but the democrats can't get a majority in virginia. and by conservatives splitting up, we elect democrats. >> that's -- >> tea party -- >> where do you come down on

christie as a presidential candidate? i don't know if you read excerpts of this "double down." but there's a dossier put together with some pretty nasty stuff about him, which is one of the reasons it sounded like mitt romney ultimately chose not to put him on his ticket. >> well, i haven't read the book -- let me say that to start with. i don't think it's for sale yet. >> it's for sale tomorrow. >> i haven't read it. christie's been very successful in a blue state. he is not liberal. he's conservative. he's more conservative than romney but he's not as conservative as haley barbour, that's for sure. i think how he does for the next two or three years, he's going to be chairman of republican governors. does he -- how we make republican governors set the agenda for the country rather than get bogged down in washington. that'll be a test for him. i think the guy has got real potential and huge advantage for him to be in the new york media

market. he has seen so much more than the governor of, you know, louisiana, or the governor of wisconsin. and we'll just see. he's clearly in the field as a serious, serious candidate and he should be. >> it's weird, andrew, some of the stuff that's in the book -- he was vetted before he became governor. i mean -- as -- some of the stuff they're talking about. how can we go back to that and say look at what happened here? >> i don't know. as you know, i really like chris christie, and what i don't understand about that is the people reading that dossier. >> went to his friends? >> came to the conclusion that -- in the book from what i've seen of the excerpts, it says not only didn't they want him on the ticket because of it but they said actually they thought if the stuff came out publicly he wouldn't be able to run for governor again. that's how bad they thought it was. >> most of it was -- >> i didn't think it was -- >> most of it was the last couple of weeks when the president came back and christie hung out with him.

and the other part was when he gave the keynote speech and didn't mention romney's name. it wouldn't have helped anyway. he might as well. it wasn't going to work. he basically gave his own speech. those are the two things that p.o.'ed the romney camp. >> i didn't understand. >> and their staffs too. and i think maybe -- i didn't know christie's staff as well, but the romney staff. >> bringing up romney, though, does force me to mention that the democratic candidate of virginia, i've known for years and years, his campaign strategy has been exactly obama's. he's not run on why terry ought to be governor. he's run on what's wrong with cuccinelli. he was out spending ten to one and 3/4 of his advertisements were negative. that's become the democrat theme. don't expect me to run on my record, but boy, this other guy's terrible. >> right. right. >> governor, i want to thank you

very much for coming in today. >> thank you, becky. >> that's governor haley barbour. >> yeah. i don't know. who's going to win? alabama again, right? >> the trifecta looks to be like. >> and now florida state's number three now. anyway. more coming up from our guest host. i was harkening back to our off camera conversation. it should be outlawed. too much better than everyone else. why bother with the games? jim bullard, more from him, and then at 8:30, hudson bay ceo richard baker will join us. first on cnbc. his company completing the acquisition today. check out the "squawk box" market indicator. opportunities aren't always obvious. sometimes they just drop in.

cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

welcome back to "squawk box," everyone. welcome back to "squawk box," everyone. we do have some earnings news and job cut news from cereal maker kellogg's, cutting the workforce by 7%. part of a cost savings program. also reported quarterly profit of 95 cents a share.

that beat the street's expectations by 6 cents. up by less than a percent in the premarket. and sisco, the one with an "s," not the "c." reported a penny above estimates, the market environment was challenging for the customers during the course of the quarter. >> i find that so confusing. someone should change. >> all right. let's -- >> let's make it easier. >> let's get back to our guest host jim bullard. were we done with our inflation conversation? people got kind of -- a lot of people are tweeting about it and talking about that now. have you always -- have you changed recently and become even -- this is almost like a new theory that you have at this point, i think. don't we always think it's different this time? i mean, volcker had to come in and save this, uyou know, save the entire world because we let it get out of control last time. i'm talking about inflation. >> i think it could happen again

and i have been worried about it. yeah, absolutely. >> there's global deflationary forces that have given you guys cover. >> yes, global deflationary forces. what is going on? what's driving that deflationary process. i think that's been -- >> what -- >> low inflationary. >> cheap labor? globalization. >> greenspan would say all these workers coming on from emerging markets which is a good story. bernanke says it's driving real interest rates low. >> you made the case for qe almost becoming a permanent program if inflation were to stay low for two or three or four years. >> i think it's a reasonable way to operate when the policy rate is at zero. >> as long as you're stuck -- so that -- the criticism used to be if the fed got to zero, it's pushing on a string, it can no longer do anything. you came up with a different way to do it with bond buying.

there is more to do and we're doing it right now. >> yes. >> and the only -- the only way that you would ever see that come back to haunt you is through inflation. as long as inflation stays low, nothing else can go wrong. >> one other way, asset bubbles and bubbles are a serious concern and -- >> no one can ever pick one out, jim. no one can ever see it when it's inflating. >> i don't agree with that. tech bubble was blindingly obvious and the housing bubble also blindingly obvious. how should the fed react to those very huge bubbles. i don't see anything of that magnitude going on right now. i made that comment elsewhere and people have come back to me saying they do see big bubble. but i don't see anything of the magnitude of the housing bubble or the tech bubble right now. >> i've got to jump in for one second because we have news on blackberry. we had news on how the stock looked like it was dropping. now reporting that blackberry limited is abandoning the plan to find a buyer and will instead raise $1 billion of new funds

and replace the chief executive and some directors. that's according to sources to that newspaper. the smartphone company had spent the last 2 1/2 months seeking a buyer, received a letter of intent from investors, fairfax financial holdings to purchase the company for $4.7 billion. fairfax had until today to complete its detailed expectation of blackberry's books. lenovo was potentially there, partnering up with qualcomm. at least that was the talk this weekend. but now, apparently to this report, blackberry off the table. that stock down. >> see if you can send me -- >> a text right now. >> yeah. your phone will still work, at least for now, but i'll tell you -- without a partner. you've got to think to yourself, what is the plan. and i imagine what's happened is none of the bids or at least indications or signals have come in. >> people wonder all the time if this was for real if there was a real deal behind this. >> whether anybody would buy the thing. >> off the table, makes you

wonder -- yeah, nothing was really there, not that they decided to -- >> let me temper this by suggesting -- this is according to unnamed sources. we do not have this confirmed yet here at cnbc. >> do we know he's definitely gone? >> if he's not there, who is? >> and he just -- you know, life is moving pretty quick. i want to make sure it doesn't pass you by. there was criticism, this isn't the guy that was going to be able -- >> that was less -- >> he didn't do much when he came in. >> we have questions ourselves. >> and now he's gone. it was thurston howell, but this was torstin hines. >> an unbelievable turn in all of this. >> we'll dig into it and find -- >> and the other question is, their new plan involves raising $1 billion by selling convertible notes to investors. we don't know who those investors will be. says he will depart the company, and the company will announce

changes to its board. wow. wow, wow, wow. this is all according to the "globe" and according to sources, a big headline on their website. and hines is out. so we will bring you more and we will also have -- go ahead. >> how about a bond market bubble. let's say the stock market isn't a bubble. >> yeah. that's a good leading candidate. the ten-year at 140 basis points or 160 basis points seemed incredibly low. and so there, i think, you can make a case. but now the yields have come up some, so -- >> right. but what about the worry that eventually if the fed's not there to buy a paper, there really is no other buyer. and what happens in a market like that? couldn't you -- that's the big worry about the fed losing control, isn't it?

if there's a complete vacuum and you're not buying and nobody else is there, then we could go up to what. >> yeah, i think we certainly do not want to be in the position to be supporting fiscal recklessness and congress and through the political process. and i don't think that anyone on the committee wants to be supporting that kind of activity. >> but how much -- how much of the u.s. treasury supply is the fed buying right now? >> the fraction of the outstanding treasuries held by the federal reserve is not as high as it was, let's say in the 1970s. it's actually not as high as you might think. it's actually kind of close to the average level that we've held. now, you could say, well, that's because a lot of treasuries have been issued, which is true, but we're not buying, we don't hold particularly the large fraction compared to what we've held in the post war era. >> so the people that are really

worried, the people that worry about currencies in general and the only way since we're off the gold standard, the only way to keep the dollar strong is that the fed has to be sort of cognizant of their duty. and their overriding duty. that's not a concern. you see that -- as long as inflation -- >> that's what -- >> as long as -- >> that's what inflation targeting is about. is you get -- you probably can't go back to the gold standard. but the modern incarnation of the gold standard is to say we're going to target inflation, we're going to tell people what we're trying to do and be held accountable for it. you're supposed to hit the inflation number that you choose. >> is there any way the global deflationary forces are sort of masking that we're making a mistake here. that you're able to do it because these are external things that are allowing inflation to stay low but were really building up -- >> some kind of -- something

will blow up on us later. >> yeah. >> you think it's a risk we're taking. i think that's a risk we're taking. >> there's -- the dislocations of the market -- the market's not getting cleared like it normally would by price discovery. >> yeah, maybe. >> all right. well -- i wouldn't like to be you. you know what you're doing. we'll come back and talk. we'll ask you about this. plenty more to come throughout the hour. plus, more on the blackberry news. the company reportedly abandoning its sales plan and replacing ceo hines with who? >> i don't know. >> we'll find out. >> and -- >> i just tried calling blackberry and if you try to call the company directory says no one there at this point. but that may be because he's the ceo and they never wanted it there. [ male announcer ] what if a small company

became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. customer erin swenson ordered shoes from us online

but they didn't fit. customer's not happy, i'm not happy. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer. then, repeat customer. easy returns, i'm happy. repeat customers, i'm happy. sales go up, i'm happy. i ordered another pair. i'm happy. (both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics.

welcome welcome back, everybody, let's get to one of this morning's top stories. the s.a.c. settlement expected to be finalized today. and kate, this is a biggy. >> reporter: this is a biggy, becky. certainly the probe has been going on for years, the indictment happened in july and we've been expecting a settlement. but today we're likely to see it. i'm told the documents are generally all but signed right now. and we're just waiting for a more official announcement as to what's here. we'll probably be hearing from the u.s. attorney for the

southern district some time today. don't know exactly when. but the key issues in the settlement are for starters a fine that totals $1.8 billion, this, of course, factors in an earlier $600 million settlement on related charges, but the 1.8 will be the headline number. this is a record for an insider trader penalty as well as a high number for the sdny and the justice department. also, s.a.c. will plead guilty to at least one count of securities fraud. details still to be determined. but i'm told while they won't plead guilty to essentially promoting a scheme of insider trading which was part of the original corporate indictment, they will plead guilty to fraudulent market activity among other details. we'll be looking for that, as well. what's going to happen today? the documents will be made public, we'll be looking for they any time now. we'll probably hear publicly from both sides at one point. perhaps this afternoon. unlikely to see anybody in court today, although the guilty plea will be sort of physically

registered by lawyers for s.a.c., becky, once a judge signs off on the accord. >> kate, thank you very much. when we come back, shares of blackberry are halted. the stock has dropped on the report that the company was abandoning the sale process. >> we can confirm that now. >> we'll have more on that when we come right back. plus, hudson bay completing the acquisition of retailer. joining us next on a first on cnbc interview. right now, though, take a look at the u.s. equity futures. this morning, the dow futures up by about 41 points, s&p up by four. more on blackberry in a moment. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates.

peace of mind is important when so we provide it services you bucan rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next.

welcome back welcome back to "squawk box," we have a big headline. shares of blackberry now halt, the device maker abandoning the plan to find a buyer. instead, it is now raising $1 billion of new funds through a convertible note. also, blackberry will be replacing the ceo and some of the directors. today was the final day of deadlines for bids. there had been lots of chatter

about whether it was going to come in with qualcomm. fairfax holdings had put a bid in earlier. some people thought they were trying to set a floor. that floor clearly has failed. they will be part, we should say, of this $1 billion investment through this convertible note. about a quarter of the investment's going to come from fairfax. apparently, other institutional investors will take the other part of it. >> basically, it means their bluff didn't work. >> the bluff didn't work, but why you would put more into a bond for a company that seem -- that seems tough. >> seems like desperate times. >> it's going to be a pretty attractive convertible, i'll bet. >> it's going to have to be, right? >> yeah. >> we should also note that john chen will become the executive chairman of the company. that's going to be a new person brought to dpsh. >> executive chairman. >> executive chairman. >> and as we said earlier, hines is out.

>> they're going to do a search for a ceo? >> it imagine. thu is now an independent company all over again. >> it raises all kinds of questions. jim, we were talking on break, you pointed out that the federal reserve has about 10,000 blackberries it uses. >> yeah. >> you're on the telecommunications committee that's been looking at this very issue? >> yeah, the information technology committee. yeah. >> which is the issue what happens if blackberry no longer -- >> yeah, like any organization, we've been trying to put plans in place over the last year and a half while this saga has been running. and so hopefully we'll have a good reaction. >> do you still type with your thumbs? >> i use -- i have a blackberry, but it's -- there's no key pad on it. >> there isn't? >> no. >> president obama has a blackberry. >> i hear he does. >> most of the white house uses a blackberry. this is going to be a huge concern for a lot of people across the globe. >> i'm pretty good at dictating now on the iphone. it works.

>> yeah? >> put me in the training. >> angela merkel, by the way, uses a samsung. i don't know what that means. more accessible to the nsa, i don't know. so anyway, that's the news of the morning and that's going to be getting a lot of attention today in the markets. let's talk about hudson's bay, the company is expected to complete the acquisition of retailer later today. >> reporter: good morning, becky. i'm here at saks fifth avenue in new york city with richard baker, the ceo of hudson's bay company. an early congratulations on the deal today. let's get started off with why saks. how important was real estate as we sit here and sort of the crown jewel of saks? >> well, saks was very important and relevant for us and something we worked on really since 2006 for three primary reasons. first, we had an opportunity to grow saks into canada, hudson

bay company is the dominant department store company in canada and through our infrastructure we'll be able to open six or seven stores, very robust online saks in canada. so that's a road map to growth that wasn't available to saks previously. additionally, we have about $100 million a year of synergies between the two companies. these two companies share a lot of the same dna and have a lot of the same principles and structure allowing us to really take advantage of the $100 million synergies. additionally, we now have enough real estate and enough ebitda that would allow us to create a reit which would really give our shareholders an understanding of the tremendous real estate value that we have. so investors would be able to do a sum of the parts, valuation, and see what the operating company's worth. >> so the ceo of saks for a

number of years, he's now no longer going to be the ceo of the company. >> well, i think for the customer, saks is going to look just the same way as it always looked except we now have opportunities to be more efficient and opportunities to grow the business in new places. and most importantly, through our reit structure and our capital structure, we'll have a lot more resources in order to reinvest in the stores. so as we've talked about, the beautiful store we're sitting in, the flagship new york fifth avenue store, we will be able to spend $200 million to $250 million to renovate the store. >> so going into the holiday season, it's important to discuss the state of the luxury consumer or that high-end shopper. do you think it's getting better? what does it look like? >> we've been on a long road to recovery. and i think while it's bumpy, the government does what they do, the increased taxes, we're seeing improvement every month,

every quarter. and i'm optimistic about this holiday season. and i'm really optimistic about the future, not only for saks and the luxury shopper, but for our mid tier department stores and our off price, as well. >> and you spoke a bit about the expansion into canada, i know it's been a big part of the strategy. is that going to continue? will you expand that part of the business into canada? >> yeah, i think we have a great opportunity with our outlet business. not only in the u.s. but also in canada. we have a lot of plans we're working on and we think it's going to continue to be a big part of our growth strategy going forward. >> you touched on a couple of moments of what you think shareholders can expect. is there anything else as i'm a shareholder to understand how this acquisition is going to add to that ultimate shareholder value? well, we really have under our business, four major brands.

and with our capital structure, we plan on reinvesting and making each one of those brands as spectacular and special as we can make them. and i think that's going to create to the overall value and success of our company going forward. >> wonderful. congratulations on the acquisition closing today. ceo of hudson's bay company. becky, joe, andrew, back to you. >> great. coming up, we'll talk more about the surprise news from blackberry. plus, much more from our guest host st. louis fed president jim bullard. and tomorrow our guest host will be chairman and ceo barry sternlicht, we'll talk energy, politics, more, tomorrow morning at 7:00 a.m. eastern. it's as simple as this. at bny mellon, our business is investments.

managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform. no, thank you.

we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. my uncle wanted to say thanks for idea hub. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a $150 amazon.com gift card. call 1-888-280-0149 now. optionsxpress by charles schwab.

welcome back to welcome back to "squawk box," the big news in the last 15 minutes, shares of blackberry under a lot of pressure. they will begin trading at 9:00 a.m. eastern. let's recap what happened so everybody understands. the final bids were due for that company today. the company, though, no longer up for sale. so it's going to go alone on its own. it's going to be receiving $1 billion of investment from fairfax which had put a bid on the company earlier, seems like a fair -- a failing effort at putting a floor on what the company was worth. but apparently nobody came in and hines is now officially out. steve? >> yeah, i wanted to get back to our guest host jim bullard. let's talk about your favorite place after st. louis, which is washington.

two senators talking about the possibility of holding up janet yellen's nomination. rand paul for an audit the fed bill. >> yeah. >> and lindsey graham for information about benghazi. what do you think of this idea of holding up the fed nomination? >> well, it's up to the senators how they want to handle this. the vice chairman yellen will go in for her testimony here pretty soon. and i think she'll do a good job. she's always well prepared and well scripted. >> do you worry about the fed being a political football in washington in that regard? >> well, it's not so much the fed, it's the appointments process generally, which has been bogged down in recent years. i'd like to see a smoother process there. that's not my job. i don't have any ideas. >> speaking of smoother process, can you walk us through what you think it is you think you can

hear when it comes to the budget process and the debt ceiling debate that would make you comfortable enough to pull the trigger on a taper. how would this play out in january and february? >> well, like i was saying earlier, i think it looks like they'll be bickering in washington for a long time to come. so i don't think that we can afford to wait till the political waters are completely calm before we decide to make a decision. so -- i kind of hate to put too much emphasis on partisan bickering in washington as sort of a special variable or special situation. you know, if it's really out of control, you know, we might pause for jst a minute. but i don't want that to be driving fed policy. >> but in september, very specifically -- >> the economy has to drive the policy, not partisan bickering. >> very specifically drove policy in that you were concerned about a shutdown. you were concerned about reaching the debt ceiling. why would you not be concerned

that could happen again in january and february? >> we did -- and we were turned out to be right. you know, it turned out to be a shutdown. like i was saying earlier, i don't think that the mechanical effects of the shutdown are actually that big on the economy because there's just some shifting around. >> yeah, like a real default would be worse than inaction. >> the kids are swimming above niagara fall, makes you nervous. >> but they're still going to be swimming there. i know we've got to go. >> no one thinks of doing default anymore. >> so we're done with that? >> yeah. >> okay. >> and sometimes -- well, it's not as bad as default, i guess. >> steve, thank you. >> my pleasure. and we'll have more still to come. plus, right after this commercial break, we're going to talk to an analyst about the blackberry news and jim cramer's getting ready for the trading week ahead. "squawk box" will be right back.

so you can have a getaway from what you know. so you can be surprised by what you don't. get two times the points on travel and dining at restaurants from chase sapphire preferred. so you can taste something that wakes up your soul. chase sapphire preferred so you can.

. . . breaking . . . breaking news. blackberry falling sharply after abandoning a plan to sell itself.

we have daniel ernst on the phone. big disappoint, no? >> well, yes for them. not a huge surprise. what i really want to know, and maybe we'll never know, did they abandon the plan for the sale or simply never get a real bid? >> the fairfax bid was never fair. they had a big stake in the company also. >> i agree the fairfax bid was never real. what i do believe was real is they took this time a serious process to see if they could sell the company. there was a lot of different speculation about who that might be. we knew the majority of u.s. tech probably wasn't going to be able to do it. i thought the qualcomm idea was somewhere interesting. >> as an analyst that covers this company now. now, this is going to be a stand-alone company. it is going to have to try to be independent. does it have a feature? what is the future of this company in. >> great question. if you look at pre-market

trading with the stock around 6:30. the market cap is $3.3 billion. they had $2.3 billion in cash at the end of the last quarter excluding the new money they are raising. it is not particularly expensive. it is trading at ruffle four times depressed ebitda. is the new management team now that heinz is out really understand what was going on here. heinz was so convinced they could bring out a new operating system seven years after the ship had sailed. >> what do you make of john chen coming as executive chairman. he has a really good record. people like him. does that give you a good hope. >> if their plan is adoption of 01-10, i would say forget about it. people still like the keyboard.

people still like the secure network. if they replace os-10 with android or microsoft operating system, they could provide a niche business to enterprise and people that like keyboard phones. there is probably a market for that. it is very small i think they could do it. >> i want to bring jim cramer into this conversation. what do you make of this news? >> to me, this is just a company in total disarray. maybe they can raise money. they are burning through money this. feels a lot like a desperation move let's see at the follow the nokia desperation move, maybe they have something that can be sold to someone. i done think that can last. >> when you hear dan say the stock is cheap, given the multiple, do you say, sure, it is cheap but cheap for a reason? >> well, i this i that, yeah, stocks are not -- stocks tell the truth all the time.

this is a company that's in a tailspin. we all know it is in a tailspin. yes. it has some intellectual property that is worth something. there were a lot of private equity firms that have looked at this thing. maybe they have stepped forward now. you can't do a thing. >> things that i have heard from sources that when we were reported this out, this was one of those transactions where if you were an lbo firm, there was no "l" you could put on this. no leverage you could put on a company like this given the dete deterioration of the business. if you believe that, it becomes very limited in terms of who the buyers are. >> we will a secular decline in dell. michael dell stepped up. the balance sheet was unbelievable. there was something to work with there. the ceo, just out the door. we all know him. he was doing his darn best. it just didn't matter. >> dan, let me bring you into

this. you heard what jim had to say. is there any sense in buying the stock according to you. >> it is cheap for a reason. what i'm saying is, is there a real strategy here to turn it around. with stock down almost 20%, pre-market, there is a potential short-term opportunity here. it is a bit of gambling. i do think there is a market for hand set to the keyboard, run in, secure network. i this i they have that. they just have the wrong operating system. the question is, can they scale down? >> unfortunately, we have to run. jim, we are going to see you in a couple of minutes. we'll be back with jim bullard in just a moment after this quick break.

with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, where experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger.

i have obligations. cute tobligations, but obligations.g. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.

let's let's get back to jim bullard for the last word. when do you start tapering? >> i think i'm on the record as being vague about that. it's a data dependant policy. we know everybody has been saying that. we'll see how it comes in. got a jobs report this week, another one before the fomc meeting in december. we'll see how the data look at

that point and go from there. >> you think those will be skewed numbers? >> this one will be but if you average, you should get an idea of what's going on. >> always a pleasure having you here and we hope you are coming back. >> thanks so much for having me. >> make sure you join us tomorrow. "squawk on the street" begins right now. indeed, what a day for blackberry. i'm carl quintanilla with jim cramer and david cramer at the new york stock exchange. we have a stunner from blackberry. the smartphone maker abandoning a plan to sell itself but will receive a $1 billion investment from fairfax international and thornstein heins will step down. david has been working the phones. give us a little color as to what